Correlation Between Bangkok Aviation and Gulf Energy
Can any of the company-specific risk be diversified away by investing in both Bangkok Aviation and Gulf Energy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bangkok Aviation and Gulf Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bangkok Aviation Fuel and Gulf Energy Development, you can compare the effects of market volatilities on Bangkok Aviation and Gulf Energy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bangkok Aviation with a short position of Gulf Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bangkok Aviation and Gulf Energy.
Diversification Opportunities for Bangkok Aviation and Gulf Energy
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bangkok and Gulf is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Aviation Fuel and Gulf Energy Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gulf Energy Development and Bangkok Aviation is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bangkok Aviation Fuel are associated (or correlated) with Gulf Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gulf Energy Development has no effect on the direction of Bangkok Aviation i.e., Bangkok Aviation and Gulf Energy go up and down completely randomly.
Pair Corralation between Bangkok Aviation and Gulf Energy
Assuming the 90 days trading horizon Bangkok Aviation Fuel is expected to under-perform the Gulf Energy. In addition to that, Bangkok Aviation is 1.36 times more volatile than Gulf Energy Development. It trades about -0.15 of its total potential returns per unit of risk. Gulf Energy Development is currently generating about 0.16 per unit of volatility. If you would invest 4,150 in Gulf Energy Development on September 3, 2024 and sell it today you would earn a total of 1,900 from holding Gulf Energy Development or generate 45.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bangkok Aviation Fuel vs. Gulf Energy Development
Performance |
| Timeline |
| Bangkok Aviation Fuel |
| Gulf Energy Development |
Bangkok Aviation and Gulf Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bangkok Aviation and Gulf Energy
The main advantage of trading using opposite Bangkok Aviation and Gulf Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bangkok Aviation position performs unexpectedly, Gulf Energy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Gulf Energy will offset losses from the drop in Gulf Energy's long position.| Bangkok Aviation vs. Bangchak Public | Bangkok Aviation vs. Airports of Thailand | Bangkok Aviation vs. AP Public | Bangkok Aviation vs. Central Pattana Public |
| Gulf Energy vs. Energy Absolute Public | Gulf Energy vs. BGrimm Power Public | Gulf Energy vs. Global Power Synergy | Gulf Energy vs. CP ALL Public |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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